What the next debt ceiling fight will look like

Key Republicans Paul Ryan and Mitch McConnell have signaled that their party will insist on a quid pro quo before raising the debt ceiling again. Just what exactly isn't clear.

House Budget Chairman Paul Ryan and Senate Minority Leader Mitch McConnell said this week that Republicans will demand something in exchange for an increase in the debt ceiling early next year.

The White House, meanwhile, said it won't negotiate on the issue.

The country now has had extensive experience with debt ceiling brinksmanship over the past three years -- as recently as October.

While no two standoffs are exactly alike, budget analysts and political observers expect this next round of see-who-blinks-first to be tamer than hot rhetoric may suggest in the weeks ahead.

For starters, 2014 is a mid-term election year and Republicans realize it was a political mistake this fall to shut down the government and risk default.

"It is hard to imagine they would risk [being] blamed for a default scare in an election year," said Sean West, US policy director at the Eurasia Group, in a research note.

Second, lawmakers have twice in the past year opted for an easy out -- a debt ceiling suspension -- when they failed to hammer out a real agreement over an increase in the borrowing limit.

A suspension doesn't technically raise the debt ceiling, but lets the Treasury Department keep borrowing as needed to pay the country's bills, thereby averting default on U.S. obligations. And it doesn't force lawmakers to go on the record as voting for an increase.

"The odds favor a clean repeat of what we did last time," said Pete Davis, a former Capitol Hill staffer and founder of Davis Capital Investment Ideas.

The last two debt suspensions were only a few months long. If Congress opts for a third, it is likely to last much longer since neither Republicans nor Democrats will want to revisit the debt ceiling issue too close to the November elections, Davis said.

Another reason this time may be different -- yes, famous last words -- is because Republicans haven't really organized a strategy around the issue yet.

"Several clients have asked us what the Republicans will demand for raising the debt ceiling. Our answer: we have no idea and neither do they," said Greg Valliere, chief political strategist of the Potomac Research Group, in a morning note Wednesday morning.

In the past, House Speaker John Boehner and other key Republicans have signaled months in advance of the debt ceiling boiling point their exact demands in exchange for a debt ceiling agreement.

This time around, the first real mention of demands came this past weekend, when Ryan said Republicans would gather after the Christmas break "and discuss exactly what it is we're going to try and get."

That's not a lot of lead time.

The current debt ceiling suspension ends February 7. After that, Treasury will be able to keep paying bills in full by using special accounting maneuvers known as "extraordinary measures."

It's hard to predict exactly when those measures would run dry. Treasury Secretary Jack Lew on Thursday alerted lawmakers that he currently estimates the measures wouldn't last past late February or early March 2014.

"[W]e do not foresee any reasonable scenario in which the extraordinary measures would last for an extended period of time -- principally because the government experiences large net cash outflows in February and March due to tax refunds," Lew wrote in a letter to Congress.

An earlier analysis from the Congressional Budget Office estimated the measures would be exhausted as early as March or as late as June.